Fitch Ratings-Dubai: The impact of the pandemic on Saudi Arabian banks has been contained, while pressures on the operating environment have eased and the economic activity is gradually recovering, supported by higher oil prices, Fitch Ratings says in a new report.
Deterioration in asset quality and profitability was limited and the banks’ financial metrics have stabilised. These have been underpinned by government support measures that included interest-free deposits, but also by the strong loan growth in 2020 and 1H21 (14.9% and 19.0%, respectively) which was boosted by the sustained momentum in retail mortgages. Delayed recognition of impairments remains a key risk but we believe the impact on the sector’s asset quality and overall financial profiles will be contained.
Fitch revised the Outlooks on all Saudi banks’ Long-Term Issuer Default Ratings to Stable in 2Q21 and 3Q21 to reflect reduced pressures on the operating environment and the Stable Outlook on the sovereign rating. Saudi banks' weighted average Viability Rating of ‘bbb+’ remains the highest in the Gulf Cooperation Council.
Pressures on the operating environment from the pandemic and lower oil prices are easing, helped by recovering global oil demand and increasing non-oil economic activity. Some sectors remain under pressure and the operating environment has not fully recovered but we believe the downside risk for banks has reduced.
The report, ‘Saudi Arabian Banks – Peer Review’, is available at www.fitchratings.com
Tel: +44 20 3530 2452
Additional information is available on www.fitchratings.com
© Press Release 2021
Disclaimer: The contents of this press release was provided from an external third party provider. This website is not responsible for, and does not control, such external content. This content is provided on an “as is” and “as available” basis and has not been edited in any way. Neither this website nor our affiliates guarantee the accuracy of or endorse the views or opinions expressed in this press release.
The press release is provided for informational purposes only. The content does not provide tax, legal or investment advice or opinion regarding the suitability, value or profitability of any particular security, portfolio or investment strategy. Neither this website nor our affiliates shall be liable for any errors or inaccuracies in the content, or for any actions taken by you in reliance thereon. You expressly agree that your use of the information within this article is at your sole risk.
To the fullest extent permitted by applicable law, this website, its parent company, its subsidiaries, its affiliates and the respective shareholders, directors, officers, employees, agents, advertisers, content providers and licensors will not be liable (jointly or severally) to you for any direct, indirect, consequential, special, incidental, punitive or exemplary damages, including without limitation, lost profits, lost savings and lost revenues, whether in negligence, tort, contract or any other theory of liability, even if the parties have been advised of the possibility or could have foreseen any such damages.